What does the shipping term FOB stand for?

The shipping term FOB stands for “Free On Board.”

FOB is an Incoterm used to assign delivery responsibilities, costs, and risk between seller and buyer. Under the international Incoterms meaning, the seller delivers the goods on board the vessel at the named port of shipment; risk then passes to the buyer. The buyer generally arranges the main sea transport and handles costs after that point.

The term developed from maritime trade, when cargo was physically moved over a ship’s rail. Modern container shipping made that image less precise, because a sealed container may be loaded before anyone can determine exactly when damage occurred. Incoterms 2010 removed the old “ship’s rail” wording.

FOB is commonly confused with “Freight On Board,” but that is not the recognized expansion in Incoterms. North American domestic contracts also use phrases such as “FOB origin” and “FOB destination,” which can allocate freight costs and risk differently from the international rule.